In Search of the Perfect Investment

For years, I’ve pushed my 10% stop loss rule. If the stock falls ten percent, sell it.

It’s a hard rule to obey, because

+ You may be in love with the stock.

+ You have “hope” it will come back.

+ You don’t know when to get back in — or even if to get back in.

Tech stocks can be the hardest. Your emotions are high. They are the most volatile stocks. And, if you sell, you may incur a large capital gain.

I’ve always used the word “inviolate.”  That’s still how I feel.

You have to hit it at 10% or close. If you wait, you could sell too low, then watch your stock bounce above what you sold it for.

You also need to monitor management reports and think about the future of the company.

For example, ADSK’s recent report was awful. And EXPE is not doing well because customers have figured it’s better (and often cheaper) to deal with airlines and hotels directly. I won’t be getting back into ADSK or EXPE. But I may get back into SQ because I like its business. To tell the truth, I only sold a portion of my SQ, so I am benefiting from today’s bounce.

Bitcoin is going up without me.

Am I mad? Yes.

Did I know it was going to happen? Yes. See this column I wrote on October 31. 

Why am I not in bitcoin? I just couldn’t figure it.

I knew I could open an account and watch my bitcoins climb through the ionosphere.

But when it came time to cash out — i.e. get real money, like American or Australian dollars — I had my doubts. I’d heard about people waiting weeks and weeks. One hedge fund speculating in bitcoins talks about 90 days.

Am I an idiot for not investigating bitcoins further?

Maybe. But heck. Everything new has its allure and its gotchas.

Gotchas are little things that become big things that creep up behind you and bite you in the tuchas (rear end). The big gotcha with bitcoins is their illiquidity. And Coinbase’s intrusiveness. And the fact that something like 25% of bitcoins have disappeared. Wait there’s more. Today’s Wall Street Journal has a story that hackers have stolen $70 million in bitcoin from a cryptominer called NiceHash, which is based in Slovenia (of all places).

Says the Journal, “NiceHash matches people in need of computer-processing power to mine cryptocurrencies with people who have power to spare.”

And now I hear there may not be enough electricity in the entire world to to keep up with demand for bitcoins!

Here’s what I’m missing, from today’s Wall Street Journal:

Meantime, today’s New York Times has two stories:

Coinbase: The Heart of the Bitcoin Frenzy
SAN FRANCISCO – The booming stock market of the 1920s had the New York Stock Exchange. The tech bubble of the 1990s had Nasdaq and E-Trade. And the virtual currency market of the last year has had Coinbase.

For this story click here. 

Bitcoin Hasn’t Replaced Cash, but Investors Don’t Care
SAN FRANCISCO – When Bitcoin first entered the public consciousness a few years back, a handful of large companies like Dell and Expedia announced that they would begin accepting the virtual currency. But there weren’t many takers.

For this story, click here.

If bitcoin continues to intrigue you, please read the book:

My thinking: What do I know about Amazon, or Square, or Facebook, or Netflix, or Google? A heck of a lot more than I know about bitcoin.

Each day, I’m looking at new stocks, new real estate, new inventions. Checking them out all takes times. And there’s always a gotcha. I’ve been in venture funds that were meant to show 30% IRR over their estimated eight year life, but showed 3% IRR over 16 years. Watching your venture fund age is not good for your aging. You’ll start to look like Alan Greenspan, age 91, did on BubbleVision (CNBC) yesterday. It was not their usual eye candy.

In short, when in doubt, stay out. Thank you Todd.

Saudi Arabia is nuts

On the one hand, the heir apparent, the 32-year Prince Mohammed, locks up several hundred princes because they’re corrupt. On the other, he spends $500 million on a whim — this yacht

Meantime, his best buddy Prince Bader just spent $450.3 million on the Leonardi picture of Christ. Think about that. Saudi Arabia is strict Muslim. Most muslims consider the artistic depiction of prophets to be a form of sacrilege.

Meanwhile, Prince Mohammed is trying to attract international investors to the new, squeaky clean Saudi.

It’s all too weird for my taste.

Here’s yesterday’s fascinating New York Times story on “Mystery Buyer of $450 million “Salvator Mundi” was a Saudi Prince.” Click here.

Most useful Windows command:

It’s Ctrl +. It makes screens larger.

You can quote me:

Harvey Weinstein should have taken up tennis. He’d still have his career and his sanity. What am I missing?

A friend replied, “Sex and power.”

I’d still rather play tennis.

How not to run your web site

This place sells travel pants. I emailed and asked if I could get delivery by next week.

Do I really care how busy they are? Two days later, they will haven’t replied.

What skill do you wish you had picked up earlier?

Quora.com asked this question of its readers and received this — Give this to your kids:

The single best thing you can do for your child to insure his or her success later in life is to put a golf club in their hand and send them packing. Nothing contributes to success more easily and more fluidly than being able to play good golf.

In my industry there was a saying: “Being able to play golf is as good as having an MBA. Being able to play good golf is as good as having an MBA from Harvard.”

I cannot underestimate how many contacts are made, deals signed, decisions concluded, layoffs planned, and futures decided on the golf course. …

If there were something I could have done when I was younger it would have been to get good at golf. I suck at golf. I don’t even play because it’s embarrassing. But I’ve been in many foursomes on many courses where being able to play good golf somehow makes you the one that people, even smart, important people, turn to for advice as if your skill at golf means you’re also a savant about business. …

I’ve been brought onto the course as a fourth with salesmen and customers simply because I could answer a few technical questions. Deals concluded, I was the forgotten fifth wheel. Sometimes they would tap my ball into the cup with their foot just to move us along. If I could have dropped out and gone back to the clubhouse, I would have. …

I couldn’t possibly be more serious. If you want a skill that directly impacts your success in the professional world, then take up golf and get good at it – really good. And then you’ve gone halfway to being successful without even needing to do the work you were hired to do.

The man at the post office

There was a man who worked for the Post Office whose job was to process all the mail that had illegible addresses. One day, a letter came addressed in a shaky handwriting to God with no actual address. He thought he should open it to see what it was about.

The letter read:

Dear God,

I am an 83 year old widow, living on a very small pension.

Yesterday someone stole my purse. It had $100 in it, which was all the money I had until my next pension payment. Next Sunday is Christmas, and I had invited two of my friends over for dinner.

Without that money, I have nothing to buy food with, have no family to turn to, and you are my only hope…

Can you please help me?

Sincerely, Edna

The postal worker was touched. He showed the letter to all the other workers. Each one dug into his or her wallet and came up with a few dollars.

By the time he made the rounds, he had collected $96, which they put into an envelope and sent to the woman.

The rest of the day, all the workers felt a warm glow thinking of Edna and the dinner she would be able to share with her friends.

Christmas came and went.

A few days later, another letter came from the same old lady to God

All the workers gathered around while the letter was opened.

It read:

Dear God,

How can I ever thank you enough for what you did for me?

Because of your gift of love, I was able to fix a glorious dinner for my friends.

We had a very nice day and I told my friends of your wonderful gift.

By the way, there was $4 missing.

I think it might have been those b*stards at the post office.

Harry Newton, who heard Ken Burns at the 92Y last night. He’s the film maker who made the brilliant 18-hour documentary:

Watch them with your kids. Click here. Learn about American history.